Barratt and Berkeley remain upbeat
● But both groups warn about Brexit uncertainty reining in housing demand
Barratt Developments, the UK’S biggest housebuilder, has reported rising full-year profits as “robust consumer demand” shores up the market despite signs of a wider slowdown triggered by last year’s EU referendum vote.
It came as rival housebuilder Berkeley also said in a trading update yesterday that despite Brexituncertaintydampening demand it remained in “excellent shape”, with annual profits set to at least match the previous 12 months.
Barratt Developments, whose strong footprint in Scotland includes the development at Winchburgh village seven miles from Edinburgh airport, posted a 12 per cent rise in pre-tax profit to £765 million in the year to end-june from £682.3m in the previous year. Revenues lifted nearly 10 per cent to £4.65 billion.
The company’s average selling price for its homes in the period rose 6 per cent to £275,200, while total completions were up marginally on the previous year at 17,395 – the highest level since the financial crash.
Barratt said that while June’s general election created some uncertainty and the impact of Brexit was still unknown, the combination of government support for housebuilding, attractive mortgage finance and Help to Buy continue to support demand.
Forward sales are up 13.8 per cent. Group chief executive David Thomas said: “This has been another excellent year for the group. We have delivered a strong operational and financial performance and our highest completion volumes for nine years.
“The group starts the new financial year in a good position with a strong balance sheet, healthy forward sales and we continue to see robust consumer demand supported by a positive mortgage environment.”
In May Barratt appealed for Scottish sub-contractors – including electricians, plumbers, scaffolders and bricklayers – to contact it to help with expected growth in 2017.
Lee Ogg, commercial director of Barratt Homes East Scotland said: “From sole traders right the way through to larger firms, we are keen to hear from those who can provide trade services for the domestic building sector.”
Berkeley, whose housing developments are focused on London and the south east of England, warned that despite its general confidence Brexit worries are compounding already difficult conditions in the UK capital after recent stamp duty tax hikes and continuing planning obstacles.
However, it said trading in the first four months of its financial year had been in line with expectations.
The update came as Berkeley prepares to face shareholders at its annual general meeting, with the potential for an investor revolt over pay after six executives collectively took home £92 million in its last financial year.
Two shareholder advisory groups – Glass Lewis and Pirc – have urged investors to vote against the pay deals, which saw bosses including chairman and founder Tony Pidgley and chief executive Rob Perrins pick up hefty windfalls from long-term incentive schemes.
The latest figures from Nationwide Building Society showed house prices dropped by 0.1 per cent in August, indicating pressure on household finances.
“We have delivered a strong operational and financial performance and our highest completion volumes for nine years.”
BARRATT CHIEF EXECUTIVE